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Given the expected depreciation of the ARS, we now project a year-over-year inflation rate of 200% by year-end, and a policy (Leliq) rate of 145%.
13/09/2023



Consumer prices rose by 12.4% MoM in August (from 6.3% in July), above market expectations of 11.5%, according to the Bloomberg survey. Annualized quarterly inflation rose to 157.7% in the quarter ended in August, from 117.7% in July. The 12-month inflation reading came in at 124.4%.

 

The monthly core measure more than doubled in August. The core index came in at 13.8% MoM (from 6.5% in the previous two months). Thus, the annualized reading jumped to 177.0% in the quarter ended in August, from 122.7% in July. Prices for regulated products increased by 8.3% MoM and 116.6% YoY, led by health services and transport. Finally, prices for seasonal products increased by 10.7% MoM (from 5.1% in July) and 128.8% YoY.

 

 

The inflationary outlook has deteriorated significantly following the devaluation of the currency after the primary election. We revised our year-end exchange rate forecast to 670 ARS/USD by December (from 615 ARS/USD before). In our view, the pass-through will likely be high and fast given the absence of a fiscal anchor and the limited impact of price controls. Given the expected depreciation of the ARS, we now project a year-over-year inflation rate of 200% by year-end, and a policy (Leliq) rate of 145% (from 160% and 110%, respectively, in our previous scenario).


Juan Carlos Barboza

Diego Ciongo